Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Strategy Briefing

Brazil’s Consumer Spending in Times of Economic Recession

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About This Report

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If you purchase a report that is updated in the next 60 days, we will send you the new edition and data extract FREE!

Brazil, once one of the fastest-growing economies in the world, is experiencing the worst recession in decades. Insights into how household spending patterns are changing after the economic recession can help companies identify opportunities and succeed, despite weak income and expenditure growth. Euromonitor International forecasts that consumer spending growth in Brazil will remain weak through to 2030, as the average household income is not expected to overtake its 2014 level before 2025.

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Worst recession in decades

Brazil entered the worst economic recession since 1990 with annual real GDP contracting by 3.8% in 2015 and 3.4% in 2016. The recession led to high rates of inflation, unemployment, falling wages and currency depreciation, which in turn squeezed consumer income and expenditure.

Middle class retreats

Brazil once boasted a phenomenal middle class expansion, but during 2011- 2016 the lowest-income social class E overtook the middle class to become Brazil’s fastest-growing social class. Through to 2030, E will continue to be the fastest-growing social class, as subdued economic growth will prevent low-income earners from entering the middle class.

The rich remain the most important consumer segment

In the midst of economic and political crisis, Brazil’s richest households have been seen to scale down their display of wealth and riches, which led to real declines in decile 10’s spending. Yet, in 2016, one in three dollars spent in Brazil was by decile 10, which means the richest 10.0% of households remained the country’s most important consumer segment.

Brazil in 2030

In 2030, Brazil is set to enjoy higher discretionary spending as a proportion of total consumer expenditure, but it will essentially remain a polarized market with weak spending growth, as the average annual disposable income per household is not expected to overtake its 2014 level before 2025.

Where do opportunities lie

Companies need a granular approach to pinpoint pockets of growth, because Brazil has a fragmented market with high levels of inequality and uneven opportunities between different age cohorts and income bands, as well as across cities and regions.